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(Petr MaA!ek/Getty Images/iStockphoto)
(Petr MaA!ek/Getty Images/iStockphoto)

Mark Healy

Smaller firms turn to hired guns for help Add to ...

When I was 25 and working as a chemical engineer, I told my boss that by the time I turned 50, most professionals would sign pro-sports-style contracts, and the notion of permanent employees would be considered antiquated.

He laughed at me.

It wasn’t the first time and I suppose it won’t be the last. I’m now half-way through that prediction, and I’ll concede it is unlikely to come true. But a trend I’m observing with some startups and small businesses is the rise of the executive in residence (EIR): managers brought in for a specific time- or project-bound senior role. For many small and medium-sized businesses, taking on an EIR makes a lot of sense, but that option must be weighed against other alternatives:

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• Hiring a permanent executive role.

• Bringing on a contract executive with no senior management team role.

• Bringing on a more junior contractor.

An old idea or a new idea?

Hiring contractors is not a new idea. There are articles in nearly every major business publication dating back 10 years or more that detail how, when and why to bring on contactors. Those stories typically focus on two driving factors: managing peak periods by the nature of the contract lengths and frequencies, and cost advantages tied to not paying out pension contributions or the employer’s share of various taxes.

The advantages are weighed against the loyalty of the individual and the risk of loss of intellectual capital. The same arguments are sometimes made for or against hiring consultants, who typically come with leverage – teams with members at different seniority levels – versus contractors who are typically on their own.

An EIR is also not a new idea, although it often applies more to academic and business incubator settings. Universities like to have executives with real-world chops on staff for periods of time to help students or researchers with thinks like business planning and commercialization. Incubators, such as MaRS in Toronto and Communitech in Waterloo, maintain executives in residence for largely the same reasons.

But small businesses hiring EIRs is a fairly new idea. Search firms in Europe and the United States started seeing increases in postings for such positions less than 10 years ago, and even then the idea was typically for the executive in question – the hired gun – to come in and do the job, but not necessarily sit at the management team table. So what has changed?

Changes in economy and in attitude

Economic realities and changes in the attitudes of founders and CEOs are making the case for small business EIRs, according to two of my clients. Increased competition in nearly every industry and a tough economy – post-financial crisis of 2008 – have triggered three structural changes. These are not necessarily permanent, but only time will tell:

• Founders and CEOs are more open to advice and help in the face of economic headwinds, and they are less reluctant to let a contracted executive into the inner circle.

• Cost reduction and certainty is top of mind for many small and medium-sized businesses, and the idea of paying a search firm and then a big salary and benefits to a senior executive is unpalatable to many small shops.

• A slew of seasoned executives lost their jobs over the past four years, and they are reluctant to return to standard executive roles, making them available to help smaller companies.

Oct. 2: The five conditions required for success of the executive-in-residence option. Look for it on the Report on Small Business website.

Mark Healy, P.Eng, MBA, is a partner at Satov Consultants – a management consultancy with practice areas in corporate strategy, customer strategy and operations strategy. Mark’s focus areas inside the customer strategy practice include consumer insights, customer experience, innovation and go-to-market strategy. He is a regular speaker and media contributor on topics ranging from marketing to strategy, in telecom, retail and other sectors. Mark is known as much for his penchant for loud socks and a healthy NFL football obsession as he is for his commitment to Ivey and recent Ivey grads. He currently serves as chair of the Ivey Alumni Association board of directors. Mark lives with his wife Charlotte and their bulldog McDuff in Toronto.

Join The Globe’s Small Business LinkedIn group to network with other entrepreneurs and to discuss topical issues: http://linkd.in/jWWdzT

Follow on Twitter: @healymark

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